New $100 million fund targets early-stage startups

Some good news for Austin startups looking to raise money: LiveOak Venture Partners is closing its first fund of about $100 million.

The firm, founded by three former Austin Ventures investors, plans to back 15 to 17 early-stage technology companies, with the vast majority of them in Texas and the Southwest.

“We’ve spent years investing in Austin companies, and we believe that right now is the best environment we’ve seen in terms of quality,” said Krishna Srinivasan, LiveOak general partner. “No idea is too small. We’ll write a first check as small as a quarter of a million dollars and grow with the company.”

LiveOak is the third Austin-based venture capital firm to announce a new fund in the past year. S3 Ventures and Silverton Partners have each raised $75 million funds to invest in tech companies.

LiveOak’s founding members have a long track record of investing in Austin. Prior to founding the firm, the team spent about 10 years at Austin Ventures where Srinivasan was a partner, Venu Shamapant was a general partner and Ben Scott was a venture partner.

Investors in LiveOak’s fund include the Texas Teachers Retirement System and the Teachers Retirement System of Illinois. The fund is expected to close this quarter.

It took the LiveOak team two years to raise the fund. “We couldn’t have picked a worse time to raise a first-time fund,” Shamapant said, citing a weak economy and a reluctance of institutional investors to put money in venture funds. “But there is a positive side to taking two years — it gives us real empathy and respect for entrepreneurs who want to raise money from us.”

While it was closing the fund, LiveOak began making investments and has done five deals in the past year. Of those, three are in Austin: NSS Labs, an information security research and advisory company; asset monitoring company Veros Systems; and Written, a content marketing company.

Josh Kerr, co-founder and CEO of Written, said LiveOak investors have played a collaborative role in building the year-old company.

“When you’re a startup, there are so many different ways to go that it’s hard to figure out the right path,” Kerr said. “They have really rolled up their sleeves and helped us focus and prioritize and make decisions. Anytime we have a challenge we know we can call them up and get great advice and feedback.”

LiveOak expects to invest about $7 million in each deal, typically starting with seed money and continuing to invest as the company grows.

“There are a lot of players out there that just want to provide seed money and move on, but we’re not in the business to just write a bunch of checks,” he said. “We want to stay involved through the full life cycle of the company.”

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